China market round-up: CICC UK gets role on London Connect, S&P and FTSE Russell adjust China-A shares weighting, China sees larger October capital outflows

In this round-up, China International Capital Corporation UK (CICC UK) became Stock Connect’s first depository receipt conversion institution, S&P and FTSE Russell added China A-shares to their indices, and October capital outflows from China jumped while outflows from other emerging markets stayed flat.

  • By Rebecca Feng
  • 07 Dec 2018
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China International Capital Corporation (UK) (CICC UK) registered as the first UK cross-border Global Depository Receipts conversion institution under the Stock Connect, according to a company press release on December 4.

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S&P Dow Jones Indices published its 2018 country classification consultation results on December 5. The index provider will add eligible China A-Shares that are accessible via the Stock Connect northbound channels to the S&P DJI’s Global Benchmark Indices. The stocks will be classified as emerging market shares. These new additions will be effective prior to the market open on September 23, 2019, according to a press release on Thursday.

The release did not disclose the projected weights of China A-shares following this adjustment but promised to make the projections, alongside a preliminary list of eligible China A-shares, available on December 31 this year.

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FTSE Russell announced on Thursday the results of the FTSE China Index Series quarterly review. Two more firms, Contemporary Amperex Technology and China Railway Construction, will be added to the FTSE China A50 Index. Meanwhile, BOE Technology Group and Focus Media Information Technology will be deleted from the index.

Changes will be effective from December 24.

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Net capital outflows from China in October accelerated to $26bn, from $10bn in September, reaching the highest level since December 2016, according to a report published by the Institute of International Finance (IIF) on December 4.

In comparison, the IIF estimated that for emerging markets ex-China, outflows were much lower at around $600m.

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Up to mid-November, China’s total import and export volume exceeded the total volume for the whole of 2017, according to a document published by the Ministry of Commerce (MoC) on December 1.

The total volume of service exports and imports in the first ten months reached Rmb4.3tn ($623.2bn), an 11.1% increase year-on-year. Exports and imports volume totalled Rmb1.4tn and Rmb2.9tn respectively.

Emerging service industries imports and exports grew 20.4%, the fastest among all industries. The growth rate was 9.3% higher than the overall growth rate and 13.6% higher than the traditional service industries. That being said, the traditional service sector still dominates total exports and imports activities.

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Trading volumes on Bond Connect reached Rmb74.3bn in November, with average daily turnover of Rmb3.38bn, according to a monthly report on the Bond Connect website. Trading activities were more than 90% concentrated in policy bonds, negotiated certificates of deposit (NCD), and treasury bonds.

Foreign investors favoured notes with shorter tenors. Bonds with maturity less than three years and between seven to ten years also took up more than 90% of the trading.

The scheme added its first investors from Austria and Denmark and has 467 international institutional investors representing 23 jurisdictions.

The total primary issues through Bond Connect amounted to Rmb3.97tn since the scheme launched.

Bond Connect saw two major breakthroughs this month. Bloomberg joined as the second e-trading platform on November 27, while further clarifications of taxation policy were published by the Ministry of Finance (MoF) in mid-November. The regulators extended the temporary exemption of corporate income tax and value-added tax for interest income of overseas institutions investing in the domestic bond market to the next three years.

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In November, the qualified foreign institutional investor (QFII) scheme totalled $100.56bn, an increase of $300m from October. The outstanding allocated quotas under the RMB QFII program were Rmb642.7bn as of November 30, unchanged from October.

The outstanding amount of the qualified domestic institutional investor (QDII) scheme reached $103.2bn as of November 30. Securities houses took up the bulk of the quota, grabbing $46.1bn of the quota. Insurance companies ranked second place with $34.0bn. Banks and trusts came third and last with $14.8bn and $8.3bn respectively.

In November, cumulative net inflows to Chinese onshore funds from Hong Kong investors under the Mutual Recognition of Funds scheme reached Rmb469m, a Rmb10.1m decrease from August. Meanwhile, net sales of Hong Kong funds in the mainland reached Rmb9.3bn, up Rmb291m from September.

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Australian firm Macquarie was said to be in final talks for a 51% owned securities joint-venture firm in China, media reported on December 3. The development came after China’s regulators approved UBS’s joint venture last Friday.

Macquarie operates an asset management business in China that helps local insurance companies and sovereign funds invest offshore.


  • By Rebecca Feng
  • 07 Dec 2018

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 China Merchants Securities Co 15.31
2 Industrial and Commercial Bank of China (ICBC) 12.35
3 CITIC Securities 8.92
4 Agricultural Bank of China (ABC) 7.60
5 China CITIC Bank Corp 6.76

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 06-Dec-18 China Gas Holdings China 1,300
2 27-Nov-18 Daimler Germany 4,000
3 26-Nov-18 Beijing Enterprises Clean Energy China 2,800
4 15-Nov-18 Sun Hung Kai Properties Hong Kong 1,200
5 12-Nov-18 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 1,500

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 30.97
2 HSBC 18.82
3 Societe Generale 3.85
4 Bank of China (BOC) 3.68
5 Bank of Taiwan 3.30

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 03-Dec-18 Huzhou Communications Investment Group China 500
2 22-Nov-18 Bank of China Tokyo Branch (BOC Tokyo) China 800
3 15-Nov-18 RusHydro Russian Federation 1,500
4 13-Nov-18 Bank of China (Hong Kong) (BOCHK) China 1,000
5 19-Sep-18 Agricultural Development Bank of China (ADBC) China 1,200